On March 2, 2008, Hu Hancheng, deputy director of the National Development Bank, was sentenced to life imprisonment for accepting bribes amounting to 5.5 million yuan. He is one of the latest officials to fall from grace due to corruption charges. Just before the annual sessions of the National People's Congress and the Chinese People's Political Consultative Conference were convened, this verdict carries a warning significance. As is well known, one of the important topics on the agenda of the National People's Congress this year is the direction and audit supervision of the four trillion yuan investment.
A close examination of Hu Hancheng's case reveals some underlying logic that could be beneficial for the healthy operation of the four trillion yuan investment.
Firstly, "Bribe ten thousand, gain ten billion!" How many companies can resist such temptation? Let’s take Hu Hancheng's case as an example. Among the 5.5 million yuan in bribes he received, two specific amounts are currently confirmed: 4 million yuan from Henan Blue Sky Group and 1.5 million yuan from Xinjiang Sanlian. These bribes involved approximately 5 billion yuan, roughly corresponding to a ratio of one ten-thousand-yuan bribe for every hundred-million-yuan benefit (for instance, Xinjiang Sanlian paid out 1.5 million yuan and secured a loan of 1.6 billion yuan). Such high returns on investment far exceed the profits of drug trafficking.
Secondly, when those who offer bribes secure excellent projects and enormous loans, how many law-abiding enterprises are harmed? In anti-corruption efforts, penalties for those who accept bribes are severe, but the pursuit of those who offer bribes seems too lenient. The cost of bribery is too low while the gains are too great. Therefore, to ensure the healthy operation of the four trillion yuan investment, it is necessary to increase the costs for those who offer bribes, establish a 'blacklist' for those offering bribes related to the four trillion yuan investment, making bribery risky and costly, which will greatly contribute to fair competition among enterprises.
The behavior of companies like Xinjiang Sanlian represents the logic of a few Chinese firms. They plan their bribery strategies, illegally amass funds, yet continue to thrive and even prosper. During this current economic downturn, we cannot help but consider that if these black hands reaching out for the four trillion yuan are not cut off, not only will valuable investments be eroded, but more importantly, the environment for fair competition will be damaged, harming a large number of outstanding companies competing fairly, dealing a devastating blow to the competitiveness of Chinese enterprises. For this reason, I propose the following:
1. The government should establish a corporate integrity system 'blacklist' - include all companies that bribe government officials and all companies that use violence to solve problems on this blacklist, categorizing them into different levels based on the severity of their offenses, addressing the problem at its source.
2. Learn from foreign anti-bribery experiences and increase penalties for companies that offer bribes. For instance, at the end of last year, the U.S. Department of Justice announced that the total penalty for Siemens' corrupt practices would reach $1.345 billion. Another example is Tianjin Dupont between 1991-2002, where doctors were bribed with a total of about $1.623 million, earning $2 million, eventually resulting in a fine of $4.79 million by the U.S. Department of Justice and SEC. Comparing the penalties received by Henan Blue Sky and Xinjiang Sanlian makes it clear what needs to be done now.
3. Establish a 'blacklist' for the four trillion yuan loans or investments, calling for companies like Xinjiang Sanlian and Henan Blue Sky to be included on this 'blacklist', clearly stipulating that any company that has offered bribes in government public health investments shall not be considered as a partner for the four trillion yuan investment.
(Reprinted from Southern Weekly, March 19th Economic Edition, Original article URL: http://www.infzm.com/content/25642)